Monday, July 27, 2015

It is doubtful that the dramatically escalating consolidation in both the health insurance industry and among hospitals and doctors will make our health care system either more efficient or more competitive.

This reminds me of the Cold War. Each side gets more powerful so that
the other side can’t come to dominate it. The two sides finally get so
big and powerful they reach a point of détente—let’s just agree to get
along. Or, in the case of the Cold War, one side just ultimately spends the other
side into submission.

That kind of environment doesn’t create more
efficiency or innovation but undermines real competition just like you
would expect one oligopoly facing off against another to do. We just end
up with a few muscle bound players creating sizable barriers for new
innovative and disruptive players to enter.Read more on my Post at Forbes

Tuesday, July 21, 2015

King V. Burwell Opponents Said Killing Subsidies Would Blow Up
Obamacare­­––Now They Want To Open Up Unsubsidized Care To Illegal
Californians

And consider this. Passage of the California legislation that has already cleared the Senate (SB 4) could be a real boon to the
business of health care delivery in California. California’s impressive
medical system could be the leader in international medical tourism. SB
4 would also make it clear that a foreign person could land at LAX,
give Covered California a call and sign up for an almost full pay
Platinum plan for a few hundred dollars a month, on the first of the
following month when their coverage became effective show up at
Cedars-Sinai Medical Center and have thousands of dollars of treatment,
get back on the plane and go home, and then drop the coverage.

Monday, June 29, 2015

Why is Obamacare still so unpopular? Why aren’t the working class and
middle-class signing up for it? Why is the Obamacare population sicker
and causing so many big rate increases a year earlier than expected? Is
Obamacare financially sustainable in its present form? Is it politically
sustainable as it is?

Here is one picture that tells you just about everything you need to
know to understand where Obamacare stands--politically and financially.

Thursday, June 25, 2015

First, as any of us who know the market can appreciate, the Court just saved the Republicans from themselves. They were in no way ready to avoid the crisis that would have engulfed the individual market––half of those people on the exchange who would have lost their subsidies and the other half off-exchange that would have seen 30% to 50% rate increases––on top of the big increases already announced––without a quick fix.

Does this mean that Obamacare has cleared its last major hurdle?

Not a chance.

Obamacare has only enrolled about 40% of the subsidy eligible market in two years worth of open enrollments. That level of consumer support does not make Obamacare either financially sustainable or politically sustainable. The surveys say the 40% who have enrolled like their plans. Of course they do, they are the poorest with the biggest subsidies and the lowest deductibles. The working and middle-class have most often not signed up for Obamacare because it costs too much and delivers too little.

That Obamacare is not financially sustainable is evidenced by the first wave of big 2016 rate increases by so many large market share insurers. The next wave of rate increases a year from now will also be large and will be in the middle of the 2016 election.

These rate increases will further undermine the political sustainability of the law that has been reflected in five years of polling.

The attempt to scuttle the law through the Supreme Court was ill conceived and Republicans are very lucky it did not happen.

Now Obamacare has to stand on its own going into the 2016 elections and the growing evidence is that won't be any easier.

Thursday, June 18, 2015

While both the House and Senate plans would create a means for people to
continue to be covered in the wake of any Supreme Court finding that
ended the subsidies in the federally run states, what we so far know
about these proposals is clearly unworkable in the market and would lead
to very big and unfortunate unintended consequences.

Monday, June 1, 2015

The Big Rate Increases Are Coming a Year Early

The Obama administration has posted the 2016 rate increases in excess of 10% that the Obamacare health plans are requesting.

There are a lot of them.

All of the federally run states have been posted and some for the state exchanges as well. Both California and New York do not have their rates on this site yet.

Some will quickly argue that many of these rate increases are subject to regulatory approval and can be rolled back. That's right. But this year the health plans have hard claim data to show the regulators and a 35% rate increase is hardly going to be rolled back to 5%.

Big rate increases like this are driven by a lot of claims experience––a lot of really lousy claim experience.

You will also notice that this list most often includes the big market share players, such as the Blues plans, in each of these states. These are the players with the best data.

That these big rate increases are coming a year before the "3Rs" reinsurance program is to end, that was supposed to subsidize the health plan's high claims experience, is not good news.

You can access the administration's website and look at all of them by state here.

To
quickly see all of the 10%+ rate increases in a particular state just
click on the state and enter a date range of 01/01/2016 to 01/01/2016.
Leave the company field blank.

If you leave the dates blank, you can see the carriers' rate submission
history since 2013. It's interesting to see what a particular carrier
increased rates at the time of Obamacare's original launch and what they
have layered on to costs since.

If you click on the company name on the left side, you will see a brief description of their justification for the rates.

For example, Blue Cross of Texas commented that it covered 730,833 individuals in 2014 with premium of $2.1 billion and claims totaling $2.5 billion––for a medical loss ratio of 119%. The plan further commented that, after the "3Rs" reinsurance adjustments, they lost 17% to 20% of premium in 2014––that would be more than $400 million. And, they are only asking for a 20% rate increase.

All of this time hardly a critical peep came from the California press and it sure looked to me like they were all happier just to reprint Covered California's upbeat press releases.

In her Friday story, the Columbia Journalism Review's Trudy Lieberman said the following:

In recent months, Covered California has cited each of these measures ["good" enrollment news] to tout its success. And though outside analysts have raised some notes of caution, press coverage has largely followed the lead set by the exchange. The result is coverage that has too often been reactive, short on enterprise, and with missed opportunities to ask some necessary questions. Covered California may ultimately have a success story to tell––but it will need to face some sharper skepticism before we can be sure.

And also from the CJR story:

It can be exhausting to sort out all of the different metrics, and the state's healthcare reporters have had plenty of other stories. But going forward, the exchange warrants closer scrutiny than, for the most part, it got this year. And while reporters should definitely be attentive to outside evaluations both critical and positive...there is a role for journalists to play, too, in getting out there and talking to people...

With all due respect to Lieberman, I would have said it more succinctly to the press: Just do your job.

Monday, April 27, 2015

The Republicans should offer an unconditional subsidy extension if the Supreme Court strikes them down

Wisconsin Senator Ron Johnson (R) has offered a plan to extend the Obamacare state exchange subsidies into 2017 if the Supreme Court strikes them down this summer. The Republican Senate leadership is supporting his bill.

But Johnson has some pretty big conditions:

Existing subsidies in the federally run exchanges would continue until September 1, 2017.

The subsidy extension would not apply to new enrollees––just those individuals and families getting subsidies at the time the Senator's bill became law.

On the face of it, Republicans are smart to demand the most unpopular parts of Obamacare should be immediately scrapped.

But, Democrats just aren't going to go for this. They will point out that while the individual mandate was being struck down the guarantee issue provisions of Obamacare would still be intact leading to significant anti-selection and problems for the health insurance markets without at least a viable alternative to the individual mandate.

Tuesday, April 21, 2015

California's Obamacare Insurance Exchange Posts Poor Results and is the Subject of an Expose

What a difference a year makes.

Last year the California Obamacare insurance exchange, Covered California, was touted as the poster child for the Obamacare launch. Supporters said it worked well, enrolled lots of people, and was off to the kind of start that proved how successful Obamacare could be.

But after the second open enrollment new sign-ups have hit a wall, customer renewal rates are among the worst in the country, and consumer complaints are growing:

Thursday, April 2, 2015

Speaking to a conservative group in Wisconsin this week, presumptive presidential candidate Scott Walker said he would not move to establish a state exchange in order to preserve the Obamacare federal insurance exchange subsidies if the Supreme Court strikes them down in an expected June ruling:

We're going to push back. The President of the United States––they've got to come up with a solution...They're going to try to put pressure on us but we need to put the pressure right back on them.

The 186,000 Wisconsin residents now getting subsidized health insurance from Wisconsin's federally run exchange would lose their premium support if and when the Supreme Court strikes down the Obamacare subsidies.

This isn't the first time Walker has tried to clearly establish himself as the candidate with the strongest conservative credentials––and biggest opponent to Obamacare.

In 2013, Walker refused to expand Medicaid in Wisconsin under Obamacare and instead came up with a plan of his own.

About Walker's Medicaid alternative, the Milwaukee Journal Sentinel––which has supported his candidacy for governor––wrote in a recent editorial:

For the governor, it was about a conservative standing firm against Obamacare. But for taxpayers, it was about losing the chance to save up to $345 million over the next two years...

Walker's decision cost taxpayers more than $100 million in the current two-year budget. An estimated 84,700 more people could have been covered under BadgerCare [Medicaid] had he taken the additional federal money.

And, for what? To make a political statement. Wrong. Wrong. Wrong.

Two years later just how well has Walker's Medicaid alternative done? See my op-ed in Forbeshere.

Thursday, March 26, 2015

Kaiser Family Foundation Survey Finds Most People Who Bought Health Insurance on the Exchanges Are Happy With It

This week the administration reported that 76% of those who
received a subsidy paid less than the full premium for the plans they
selected. And, 69% are
paying less than $100 after the subsidies––46% are paying $50 or less.

It would appear from this data that it is the lowest income people who
are most often signing up for coverage. They are the ones who get the
biggest premium subsidies as well as the reductions in their deductibles
and co-pays.

So, the Kaiser Family Foundation has found that these people who are
having their premiums and deductibles disproportionately subsidized are
happy with their coverage. Hardly a surprise. If you paid for most of my
insurance and cut my deductibles from the standard levels I'd be pretty
happy too.

My sense has always been that Obamacare appeals to people very differently depending on their incomes. I will call it the Obamacare dichotomy: Poorer people get by far the lowest premiums and deductibles from Obamacare and working class/middle class/wealthier people, who pay very high premiums for high deductible plans, get relatively very little from it.

Why do most people express dissatisfaction with Obamacare in most of the polls? Why did Obamacare fare so badly in the last election? It seems to me that all of this has to do with who benefits and who does not.

This week consulting firm Avalere found the same enrollment breakdown I pointed to last June between the poor and the middle class after analyzing the most recent enrollment reports from the government:

Wednesday, March 25, 2015

Readers of this blog know that I have made a number of points about Obamacare in recent months:

The number of people signing up for Obamacare is well below the level necessary to make the rates stable over the long-term––the longstanding insurance industry standard calls for getting 75% of an eligible group in order to have enough healthy people in the pool to pay the costs of the sick people. I have reported to you that less than half of the subsidy eligible have signed up so far.

The Obama administration's enrollment estimates, that they now use to celebrate their 2015 enrollment results, were low ball estimates that aren't close to the kind of enrollment they need to make the program both politically and financially sustainable.

Obamacare's overall enrollment is coming up way short of original projections and has slowed down considerably in the most recent second open enrollment.

In the face of these comments you have likely noted any number of press reports in the past weeks pointing out just how well Obamacare has been doing.

Thursday, March 5, 2015

The Supreme Court heard oral arguments yesterday in the King v. Burwell case that would throw out the Obamacare subsidies for millions of people now receiving them in the federally run health insurance exchanges.

It sure sounded like perennial swing vote Justice Anthony Kennedy is ready to save the subsidies and Obamacare given his comments suggesting a finding for the plaintiffs would end up coercing the states into building an insurance exchange––something that would present Kennedy with a "serious constitutional problem."

But I was also struck by this line in a Washington Post article about the oral arguments: "More than the other justices, Kennedy is the one most likely to think out loud during oral arguments, trying out various theories and posing quandaries for lawyers."

Translated: It ain't over til it's over.

At one point, conservative Justice Samuel Alito asked if perhaps the Court could delay the effect of a ruling ending the subsidies thereby giving the Congress and the states time to remedy the fallout.

Monday, March 2, 2015

Key Senate Republican committee chairman Orrin Hatch (UT), John Barrasso (WY), and Lamar Alexander (TN) have an op-ed in the Washington Post today saying they have a plan if millions of Americans lose their Obamacare subsidies this summer.

First, I have no idea how the Court will rule, likely in late June. While it is hard for me to see Chief Justice John Roberts voting to strike a major blow to the new health law now when he had that same chance three years ago and didn't, no one can predict what is going to happen this time.

But if the Court does throw the subsidies out in late June, it will mean that the Obamacare insurance subsidies would no longer be available to millions in as many as 37 federally-run states come August 1.

Realizing just what chaos this would cause, these three senators wrote:

First and most important: We would provide financial assistance to help Americans keep the coverage they picked for a transitional period. It would be unfair to allow families to lose their coverage, particularly in the middle of the year.

They provided no more detail except to say that they have had discussions with House and Senate colleagues and that there is "a great deal of fconsensus on how to proceed."

Wednesday, February 18, 2015

Here is what President Obama said in a recent video, "The Affordable Care Act is working. It's working a little better than we expected."

On Tuesday, the administration announced that 11.4 million people signed up for Obamacare in the second open enrollment.

That number is higher than the number that will ultimately pay for their coverage and complete the enrollment. Even after they complete signing up the stragglers, it is more likely the paid for number will be about 10.5 million based upon a number of conversations I have had with carriers.

But let's assume they end up with as many as 11 million people. Would that exceed expectations?

Here is what the Congressional Budget Office projected in May of 2013:

Tuesday, February 10, 2015

House Energy and Commerce Chairman Fred Upton along with Senate Finance Chairman Orin Hatch and Senator Richard Burr have outlined what is, at least for now, the Republican alternative to Obamacare.

Republicans will now argue they have a better health insurance reform plan and that Obamacare should be repealed and replaced by it––particularly if the Supreme Court plunges the new health law into chaos by throwing the subsidies out in 37 states.

They will have an uphill battle. Not because these Republicans don't have a lot of good ideas, but because they have put a list of big and complicated changes on the table. Lots of people may not like Obamacare but Republicans have now really muddied the waters with a huge take it or leave it alternative that will have plenty of its own reasons to give voters pause.

My sense is that voters will end up liking parts of both Republican and Democratic ideas. They might ask a reasonable question: Why can't we take the best from both sides?

If Democrats would just admit Obamacare needs some pretty big fixes, and Republicans would be willing to work on making those fixes by putting some of these good ideas on the table, the American people would be a lot better off.

In fact, I am hopeful that this is eventually what will happen once Obamacare's failings become even more clear (particularly the real premium costs) and both sides come to understand that neither will have a unilateral political upper hand. See my recent op-ed on how to fix Obamacare here.

Let's take an in-depth look at the Republican alternative, "The Patient Choice, Affordability, Responsibility, and Empowerment Act."

Of course that begs a question, Just what should we do to make health insurance reform politically and financially viable?

Proposals the Republicans are now considering will have no chance of getting by a Presidential
veto––even if they can muster 60 votes in the Senate––so long as Obama is President. Even if the
Supreme Court takes away insurance subsidies in the state exchanges I
doubt this President and this Congress can agree on anything.

But in 2017, it will be a different matter. I really do expect the new President, Democratic or Republican, as well as the new Congress, will be anxious to move on past this long and tedious health care debate to other important issues.

Whoever wins the 2017 elections, I have no doubt the consensus will be that health insurance reform will need lots of reforming. And, the only way that will happen is when one political party is able to bring lots of members of the other party on board.

Democrats might think Obamacare will survive intact. It won't. Five years later it has failed to garner the support they thought it would.

Republicans might think they can do a unilateral conservative health insurance reform in 2017––just like the Democrats rammed their version through in 2010. They won't. The country has had enough of that.

Washington Post's Wonkblog "Pundit of the Year"

Bob Laszewski was named the Washington Post's Wonkblog "Pundit of the Year" for 2013 for "one of the most accurate and public accounts" detailing the first few months of the Obamacare rollout.

"Top 5 Speaker on Health Care"

Bob Laszewski has been named a "Top 5 Speaker" on health care in a survey involving 13,000 business leaders, educators, association members, and others.

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The purpose of thishealth care blogis to provide an ongoing review ofhealth care policy activity in Washington, DC and the marketplace.

Health Policy and Strategy Associates, LLC (HPSA) is a Washington, DC based firm that specializes in keeping its clients abreast of the health policydebate in the nation's capital as well as developments inthe health care marketplace.

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Robert Laszewski, Washington, DC

Robert Laszewski is president of Health Policy and Strategy Associates, LLC (HPSA), a policy and marketplace consulting firm specializing in assisting its clients through the significant health policy and market change afoot.
Before forming HPSA in 1992, Mr. Laszewski was chief operating officer for a health and group benefits insurer.
The majority of Mr. Laszewski’s time is spent being directly involved in the marketplace as it comes to grips with the health care cost and quality challenge.